GBP: Positive Momentum Will Continue to Drive Sterling Higher
By Nick Cawley
Fundamental Forecast for GBP: Bullish
The roundly disliked Chequers plan is now looking like it is a non-starter, in its current form, while both the EU and the UK are leaning towards a Canada/Canada+ deal, an agreement that will ease concerns over future trade. Talks remain ongoing and will continue to provide wire services with a raft of headlines, so the usual Brexit-disclaimer remains in place.
The UK data and events calendar are busy this week with a slew of heavyweight data prints before the latest release from the Bank of England on Thursday. While UK interest rates are fully expected to remain unchanged for months to come, accompanying text from the MPC may provide some further economic clarity.
The data releases in the first half-of-the-week remain as important as ever and will need to be closely monitored. While Sterling is currently executing a Brexit-driven U-turn, any negative data releases will apply a brake to Sterling’s progress and keep bullish momentum in check in the short-term.
Australian Dollar Still Short Of Buy Signals Despite Strong Data
By David Cottle
Fundamental Australian Dollar Forecast: Bearish
There are some more specific Australian problems. None of them is new. Inflation remains stickily low, consumer debt remains stickily high. Indeed the markets still do not think that record-low interest rates are going anywhere for at least another year. With US rates still very likely to rise, the Aussie remains in a very tough place.
This week will not change that, but it will bring official employment data out of Australia. If job creation holds up then the Aussie could get a little bounce but, as we saw in the case of last week’s growth data, those bounces tend not to last. There was another one when the Reserve Bank of Australia was perhaps a little less dovish than markets had feared in its post-rate-decision statement. But that didn’t last either.
Given that gloomy trade headlines, too, are all-but assured thanks to the Trump White House’s apparently renewed focus on Japan, as well as China and Western Europe, as a trade-surplus ‘sinner,’ it is very hard to see any reason why the Aussie Dollar’s travails should halt this week.
So it is yet another bearish call.
Crude Oil Price Forecast: Sentiment Remains Weak
By Gary X. Ashton
This week, traders and analysts will get updated market information from the IEA, EIA and OPEC as all three are set to release their respective monthly market reports.
First up is the EIA’s short-term energy outlook on Tuesday, where traders will be interested in the administration’s oil price expectations.
Next up is OPEC’s report on Wednesday. Traders and analysts will be looking for changes in OPEC’s supply and demand forecasts.
Oil analysts remain bullish about rising oil prices despite some recent price resistance. They predict an increasingly tight oil market that could take prices over $90 per barrel before the end of 2018. The central thesis is that looming sanctions against Iran will soon cripple global oil supplies.
OPEC crude oil production rose in August, however, to the highest level this year, and a trade war with the U.S. could hit future Chinese oil demand. The market eagerly awaits a final decision from U.S. President Donald Trump, who warned on Friday that he was ready to implement trade duties on another $267 billion in Chinese goods on top of $200 billion in imports already flagged for tariffs. Economists estimate that this is the entire amount of products the U.S. imports from China, and tariffs could tip the global economy into recession if the president fully implements this policy. The uncertainty around such a scenario does not paint a bullish picture for oil markets.
Turkish Lira, Government Bonds Drop on Emerging-Market Weakness
By Constantine Courcoulas
Turkey’s lira and bonds dropped, snapping a recent rally fueled by bets for an imminent interest-rate increase, as MSCI Emerging Markets Currency Index declined the most in almost a week.
The currency fell for the first time in four days versus the dollar as data showed gross domestic product expanded at an annual pace of 5.2 percent in the second quarter, slowing from a revised 7.3 percent in the previous three months.
With policy makers expected to extend a tightening cycle when they meet on Thursday, the outlook for the economy is grim. The monetary authority has already boosted funding costs by 650 basis points since April but is coming under pressure to do more to contain a market rout.
The central bank will raise its one-week repo rate by another 300 basis points this week, according to the median estimate in a Bloomberg survey.
Goldman admits it was wrong on Apple, boosts stock outlook by 20 percent
By Michael Sheetz
Goldman Sachs raised its price target on Apple stock all the way to $240 per share from $200 per share on Thursday, admitting they got the stock completely wrong this summer as it rallied to a $1 trillion valuation.
Goldman laid out its expectations for the next generation of iPhones and reversed its previous bearish position on the technology giant.
“We also take this opportunity to eat our hat somewhat on our cautious stance this Summer,” Goldman analyst Rod Hall said in a note. “We had expected worse iPhone X demand and some pullback in the stock — clearly neither of these two things happened.”
Alphabet Seen Rising By 17% on Strong Growth
By Michael J. Kramer
Alphabet Inc.’s (GOOGL) stock has fallen sharply since the end of August. The stock now finds itself almost 8% off its highs around $1,285 during the middle of July. But the parent of the search engine Google may be set to rebound by as much as 8% in the coming weeks, according to technical analysis.
The technical chart shows shares of Alphabet falling to technical support around $1,170. Should the stock continue to hold above that level of technical support, it could help to fuel a rise back to $1,271.
Analysts see the stock rising even higher, by as much as 17%. They have increased their average price target on the stock since January.
The optimism among analysts comes as earnings and revenue estimates for the company rise. Since the beginning of the year, earnings estimates for 2018 have increased by more than 15% to $47.79 per share.
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